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 Seasonal decline in business activity, political instability, and lack of IMF loans affect hryvnia, - NBU

The decline of hryvnia exchange rate is caused by both temporary and fundamental market factors leading to a falling supply of foreign currency.

Deputy Head of the National Bank of Ukraine Oleh Churii stated, Censor.NET reports referring to Interfax-Ukraine.

"A seasonal decline in business activity in January resulted in a dropping foreign currency inflow in February, while political instability and delays in resuming cooperation with the International Monetary Fund affect the expectations of business circles," a comment released by the NBU on Tuesday night reads.

Speaking of the fundamental factors, Churii mentioned the decline in prices on world commodity markets and devaluation of the currencies of trade partners.

Read more: Ukraine's Finance Minister sees no significant macroeconomic factors for national currency movements

"Reviving business activity, restoring political stability in the country, and resuming cooperation with the IMF should remove these temporary imbalances," Churii stated.

According to him, smoothing excessive hryvnia exchange rate fluctuations is part of the NBU monetary policy aimed at ensuring price stability, and the regulator has sufficient financial resources for carrying out further currency interventions if necessary.

Churii argues that since the beginning of the year the NBU has held three currency purchase auctions totaling $65.7 million and 10 currency sale auctions to the amount of $238.5 million, including in February when net sales totaled $98.5 million, while Ukraine's international reserves made $13.4 billion at the beginning of the month.

Read more: Resuming cooperation with IMF is vital for Ukraine, - NBU

The NBU deputy head says that in order to prevent external risks affecting the balance of payments and hryvnia exchange rate as well as to reduce inflation to 12 percent by the end of 2016, the NBU keeps interest rate at 22 percent per annum from September 2015.

"Judging by the results of January-February, we can see that such a restrained monetary policy is effective and contributes to slowing consumer inflation," Churii said.

Read more: MP Lutsenko: Ukraine lost half of economy, hryvnia to keep falling
 
 
 
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